Crushed by dreams! Kerala's overseas edu craze setting debt trap for families

EDUCATION loans can be brutal. Sherly Paul (name changed), a widow from Kochi, learned this the hard way. In 2010, she availed a 20 lakh loan from the State Bank of India to fund her elder son's BTech in London.

- RAJESH ABRAHAM @Kochi

EDUCATION loans can be brutal. Sherly Paul (name changed), a widow from Kochi, learned this the hard way. In 2010, she availed a 20 lakh loan from the State Bank of India to fund her elder son's BTech in London. But by the time the loan was paid off in 2015, she had coughed up nearly 50 lakh, thanks to a steep interest rate of around 15% and the burden of paying a 33% margin money on each disbursal.

"When an instalment of ₹13 lakh had to be paid for semester fees, the bank provided only ₹10 lakh. We had to come up with ₹3 lakh every time," she recalls.

In 2016, she took another education loan—₹35 lakh from Canara Bank—for her son's postgraduate studies in the US. This time, the interest rate was lower, starting at 11% and eventually dropping to 9%. But the total repayment still ballooned to ₹50 lakh. "We pledged gold jewellery worth ₹10 lakh last year to settle the loan," she says. "When I considered another education loan for my younger son, my elder son asked, 'Do you want to go through the same trauma?'"

Fortunately for Sherly, her son landed a well-paying job in the US after his degree. But many others haven't been as lucky.